The Honorable Kevin McCarthy
U.S. House of Representatives
Washington, DC 20515
Dear Mr. Speaker:
I am writing to follow up on my previous letters regarding the debt limit and to provide additional information regarding the Treasury Department’s ability to continue to finance the operations of the federal government. In my May 15 letter, I noted that our best estimate was that Treasury would be unable to continue to satisfy all of the government’s obligations by early June if Congress does not raise or suspend the debt limit before that time.
In that letter, I also noted that while it is impossible to predict with certainty the exact date when Treasury will be unable to pay all the government’s bills, I would continue to update Congress as more information becomes available. With an additional week of information now available, I am writing to note that we estimate that it is highly likely that Treasury will no longer be able to satisfy all of the government’s obligations if Congress has not acted to raise or suspend the debt limit by early June, and potentially as early as June 1.
These estimates are based on currently available data, and federal receipts, outlays, and debt could vary from these estimates. I will continue to update Congress as more information becomes available.
We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States. In fact, we have already seen Treasury’s borrowing costs increase substantially for securities maturing in early June. If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests.
I continue to urge Congress to protect the full faith and credit of the United States by acting as soon as possible.
Janet L. Yellen
The full text of the letter can be found here.